Georgia's TBC Bank to pay €121mn for Societe Generale's local unit

By bne IntelliNews September 13, 2016

TBC Bank, Georgia's second largest lender, will pay GEL315mn (€121mn) to buy Societe Generale's local unit Bank Republic, the French lender announced on September 12. On the same day, TBC Bank confirmed earlier rumours that it would acquire a 93.64% stake in Bank Republic.

TBC Bank is in an expansionary mood after achieving its premium listing on the London Stock Exchange in August. The lender has trailed behind the largest banking group in Georgia, Bank of Georgia, for years, but appears eager to close the gap and assume leadership position. In addition to Bank Republic, with which it will merge, the lender will also buy “selected assets and liabilities” of a smaller bank, Progress Bank, it announced on September 12.

Billionaire businessman and former Prime Minister Bidzina Ivanshvili holds a 21.71% stake in Progress Bank. TBC Bank would purchase GEL216mn worth of liabilities from the small lender.

Bank Republic is the fourth largest bank in Georgia by deposits and the third largest by loan portfolio. The transaction will be finalised by the end of the year, TBC Bank announced, and the payment will be in cash (70%) and TBC Bank shares (30%). The lender intends to purchase the remaining 6.3% shares in Bank Republic from the European Bank for Reconstruction and Development (EBRD), and has entered preliminary negotiations to do so.

“The acquisition of Bank Republic is a critical step in delivering on TBC Bank's strategy and represents a major step foward in its ambition to build the leading banking group in Georgia and the broader Caucasus region,” TBC Bank CEO Vakhtang Butskhrikidze said in a statement.

The acquisition represents yet another step in the consolidation of the small Georgian banking sector, which is already dominated by TBC Bank and Bank of Georgia. After the acquisition and merger, there will be 18 lenders left in Georgia, but the largest two banks already command two thirds of banking assets. Georgian banks have performed well this year, with profits jumping by 23.2% y/y to GEL347.3mn (€136mn) in the first seven months. All but one of the banks have foreign capital.

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